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 user 2008-01-02 at 2:07:00 pm Views: 42
  • #19128

    Oil price at record $100 a barrel
    Oil has traded at $100 a barrel for the first time.
    in Nigeria, Algeria and Pakistan, the weak US dollar and the threat of
    cold weather have all raised prices after the new year break.Light
    sweet crude rose $4.02 to $100 a barrel in New York, prompting a drop
    in shares and a surge in gold prices.There are concerns that the high
    price of oil will stoke inflation at a time when many central banks are
    trying to cut interest rates to stimulate growth.US shares had already
    been hit on Wednesday by figures showing that the manufacturing sector
    was contracting.After oil broke the $100 barrel they fell further, with
    the Dow Jones trading 215.1 points, or 1.6%, lower at 13,049.73.”All of
    the factors that pushed us above $80 are now moving us higher,” said
    Peter Beutel at Cameron Hanover in Connecticut.”Until we get more
    supply or demand starts to take a hit, there is no reason we can’t see
    any number.”

    But some analysts played down the
    relevance of passing the $100 mark.”The entire focus on $100 oil is
    frivolous,” said Tim Evans at Citigroup Futures Research in New
    York.”It is not a magic number. It doesn’t suddenly make this a
    fundamentally strong market.”Trading volumes were about half of their
    usual levels as traders returned from their new year breaks, which may
    have exaggerated the effect of speculative transactions, analysts
    said.”I would imagine the speculators are the biggest drivers today,”
    said Phil Flynn from Alaron Trading in Chicago.The oil-producers’
    cartel Opec has also blamed speculators for the high price of crude and
    said that there is plenty of the fuel in the market to meet demand.

    Bush has said he will not be drawing on the US Strategic Petroleum
    Reserve (SPR) to try to bring down prices.”This president will not use
    the SPR to manipulate (oil prices),” White House spokeswoman Dana
    Perino said.”Doing a temporary release of the SPR is not going to
    change prices very much.”

    Moving on up?
    There are those who
    believe that oil prices can rise significantly higher.While daily price
    rises have been blamed on unrest in oil-supplying countries such as
    Nigeria, a underlying and significant factor has been an increase in
    demand from China and India.”$100 is just the beginning,” said Zachary
    Oxman, senior trader at Wisdom Financial in California.”This is kicking
    off what you are going to see this year. There will be huge moves up in
    gold and huge moves up in crude.”